General Counsel, P.C.

  • Practice Areas
    • Business Law
      • Business Breakups in Virginia
      • Minority Shareholder Protections
      • Emerging Companies
      • Entity Formation
      • Foreign Companies Entering U.S. Market
      • Real Estate and Leases
      • Starting a Business, Licensing & Compliance
      • Registered Agent Services
      • Succession Planning for Business Owners
      • Tax Law Matters
      • Charitable Solicitation Practice Group
      • Intellectual Property
        • Trade Secrets
        • Copyright
        • Trademark
    • Employment Law
      • Employment Documentation
        • Building Your Cornerstone
        • Employee Document Vault
        • Employee Handbook Tuneup Services
        • Guidelines for Hiring or Firing Employees
        • Separation Agreements
      • Drug Testing
        • Drug Testing Your Workforce – Best Practices
        • Laws Affecting Drug Testing Policies
      • Regulatory Issues
        • VA, MD, DC, Rights & Obligations
        • Age Discrimination
        • Americans with Disabilities Act
        • At-Will Employment
        • Fair Labor Standards Act
        • Family Medical Leave Act
        • Pregnancy Discrimination Act
        • Title VII
      • Non-Competition Agreements
        • District of Columbia
        • Maryland
        • Virginia
      • For Employers of Uniformed Services Members
      • Employer Considerations For Government Contractors
      • For Non-Profits
    • Family Law Attorneys
      • Divorce
        • Grounds for Divorce
        • High Net Divorce
        • Same Sex Divorce
        • Military Divorce
        • Uncontested Divorce
        • Litigation vs. Alternative Dispute Resolution in Divorce
        • Post-Divorce Enforcement and Appeals
        • Alimony and Spousal Support
        • Child Custody
        • Child Support
      • Property Division
      • Alimony and Spousal Support
      • Child Support
      • Child Custody and Visitation
      • Marital Agreements
      • International Family Law
      • Domestic Violence and Protective Orders
    • Government Contracts
      • Bid Protests
      • Government Contract Claims and Appeals
      • Getting Government Contracts: Small Business Certification Services
        • 8(a) Small Business
        • HUBZone Small Business
        • SDVOSB Program
        • Veteran-Owned Small Business
        • Women-Owned Small Business
    • Litigation
      • Arbitration, Mediation & Alternative Dispute Resolution Attorneys
      • Commercial & Business Litigation
      • Employment Disputes
      • Government Contracting Disputes
      • Intellectual Property Disputes
      • Local Counsel
      • Pre-Litigation
    • White Collar Crime
  • About Us
    • Overview
    • Biographies
      • Andrew “Andy” Baxter
      • Matthew Brennan
      • Hailey Render Brown
      • Christopher D. Davis
      • Joanna Foard
      • Merritt Green
      • Elizabeth Hart
      • David Kaye
      • Samer B. Korkor
      • David Proano
      • Evan St. John
      • Lewis Rhodes
    • How We Help
  • Resources
    • Practical Counsel Blog
    • Bid Protest Weekly
    • COVID Compliance Plans
    • Virginia COVID Workplace Safety and Health Standards
    • Video Library
    • Webinars
    • Quotes in The News
    • GCPC First Generation Law Student Scholarship
  • Testimonials
  • Contact
  • Make Payments
703.556.0411

Hazards of Failing to Pay Federal Payroll Taxes

Friday, 03 May 2013 / Published in Corporate & Tax

Hazards of Failing to Pay Federal Payroll Taxes

In these tough economic times it may be tempting for a business to fund its operations with funds it has withheld from the wages paid to its employees as federal income and employment taxes rather than depositing those amounts with the Internal Revenue Service. But the cost of doing so may be far more severe than the financial problems that caused the business to take such a course of action in the first place.

Since it is often the case that businesses will use pay payroll taxes as a last resort before their failure and collapse, owners assume that such a course of action has little practical risk for them or their businesses. Yet, that sense of comfort is far from the truth. In fact, the failure to pay payroll taxes could very well result in financial disaster for a business owner. Not only can the IRS seek to recover unpaid payroll taxes (plus interest and penalty, where applicable) from the business, but it is also authorized to seek to recover those amounts directly from the owners and/or officers of a business who were “responsible” for collecting or paying payroll taxes—the so-called Trust Fund Responsible Person Penalty—regardless of whether such individuals personally benefited from those unpaid payroll taxes. And the IRS can be expected to go after those individuals if a business fails to pay payroll taxes over a prolonged period of time.

Practical Counsel: Payroll taxes should not be thought of as a quick and cheap fix for an ailing business. Given the IRS’ vigorous efforts to collect unpaid payroll taxes, a cash starved business’ use of withheld payroll taxes to fund its operations will likely lead to its demise and the financial ruin of its owners.

  • Tweet

TOP ARTICLE CATEGORIES

  • COVID-19

  • BUSINESS

  • GOVERNMENT CONTRACTS

  • EMPLOYMENT

  • LITIGATION

Subscribe to Blogs and Updates

  • HOME
  • ABOUT US
  • PRIVACY POLICY
  • DISCLAIMER
  • SITEMAP
  • CONTACT US
  • MAKE A PAYMENT

General Counsel, P.C. BBB Business Review

© 2021 General Counsel, P.C. | Website Design & Development by High Level Thinkers

TOP